NEW DELHI: After a wait of over six months, the Goods and Services Tax (GST) Council will meet on May 28 to discuss a host of important pending issues, including proposals to reduce GST on essential medicines and equipment used to treat Covid-19 and the shortfall in GST compensation this year.
Union finance minister Nirmala Sitharaman will chair the 43rd meeting of the council via video- conferencing, a tweet from her official account said. According to sources, the meeting will discuss proposed reductions in GST levied on vaccines, Covid-19-related medicines, oxygen cylinders, and other items.
While the finance ministry has already given import duty relief on Covid- related medical supplies and vaccines, state ministers have constantly asked for a similar relief on locally produced vaccines too.
Odisha Chief Minister Navin Patnaik wrote in a letter to Sitharaman last week that states have been asked to purchase vaccines for people in the 18-45 years age group and that GST on vaccines would make the purchases costly for them.
Even though the finance minister has given a long reply on GST-related issues, the states have insisted that they want a discussion at the earliest. Another matter which is likely to be discussed in the meeting is regarding the shortfall in GST compensation to states.
Despite robust collections, the shortfall is likely to be around Rs 1.6 lakh crore this year, according to experts. Last year, the Council had worked out a financing method with the Centre borrowing on behalf of the states.
It has to now examine whether there is a need to continue the same formula for this financial year too. The Council has not met since last October though there were multiple requests for meetings by the states.
Two days ago, the issue was raised in a strongly worded letter from the West Bengal Finance Minister Amit Mitra, who wrote, “... the GST Council was mandated to meet once in every quarter. Unfortunately, this solemn mandate has been violated twice over, by not calling a meeting... for two consecutive quarters... I fear that not holding meetings regularly may also lead to a trust deficit. In order to restore the sanctity of the Council, I sincerely urge you to call a virtual meeting”.